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Why vaccine developments argue for more fiscal stimulus: Morning Brief

Myles Udland
·Markets Reporter
·5 min read

Thursday, November 19, 2020

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Supporting the economy for a few months is easier than doing so indefinitely.

The positive news on COVID-19 vaccine developments continued on Wednesday.

Before the market open, Pfizer (PFE) and its German partner BioNTech (BNTX) announced that final results for their Phase 3 trial show the vaccine to be 95% effective.

This comes just two days after Moderna (MRNA) announced its COVID vaccine candidate was 94.5% effective and a little over a week after Pfizer’s preliminary results showed 90% efficacy in preventing infection. Pfizer is now set to apply for emergency use authorization for its vaccine from the FDA within days.

In an interview on CNBC on Wednesday, former FDA commissioner Scott Gottlieb said you can “effectively end” the pandemic with wide distribution of a vaccine with this level of efficacy. And with these developments, an end to the most acute phase of the pandemic is starting to come into focus.

But having line of sight on an eventual end to the present health emergency does not change the fact that the situation on the ground in the U.S. continues to deteriorate.

COVID hospitalizations are at a record. Deaths are on the rise. And the positive rate for COVID tests nationwide is now the highest it has been since May.

And vaccine developments offering a view on when or how this pandemic might end should heighten calls for more fiscal stimulus, not leave policymakers thinking that efforts to date have been and will remain adequate. As of now, any talks related to additional fiscal support appear to have stalled.

All while the surge in cases is starting to strain the economy.

“The resulting rise in virus fear and renewed social distancing measures are constraining sentiment and weighing on mobility and spending,” said Gregory Daco, chief U.S. economist at Oxford Economics.

“Household income is gradually falling back toward its pre-COVID level as fiscal aid no longer offsets the 10 million jobs shortfall relative to February and capped wages. In this environment, the recovery’s fragilities are becoming apparent.”

The following chart from Daco shows how the boost to incomes from various fiscal aid packages is set to run off in the months ahead absent fresh stimulus. Leaving U.S. households to face the cold weather, a surge in the virus, and an uncertain labor market without any of the support that helped consumers thrive through the spring and summer of 2020.

Households incomes are set to flatline in the months ahead as fiscal support related to the pandemic expires, putting at risk the nascent economic recovery. (Source: Oxford Economics)
Households incomes are set to flatline in the months ahead as fiscal support related to the pandemic expires, putting at risk the nascent economic recovery. (Source: Oxford Economics)

And so unlike March and April when there was no real sense of what would happen next medically, economically, and societally, the vaccine progress we’ve seen answers a lot of outstanding unknowns.

Distribution challenges and widespread acceptance from the public that the vaccine is safe to take are hurdles that we are yet to overcome.

But the pandemic is no longer an indefinite event.

There is reason to believe that in two or three quarters life in the U.S. will look fairly normal, that the virus will be well-contained, and that tens of millions of people will be inoculated.

Supporting the economy now to keep struggling businesses open and keep struggling households afloat is about getting us to these dates with an economy that remains resilient, not one wearing the scars of a recovery cut short by premature fiscal austerity.

By Myles Udland, reporter and anchor for Yahoo Finance Live. Follow him at @MylesUdland

What to watch today


  • 8:30 a.m. ET: Initial jobless claims, week ended November 14 (700,000 expected, 709,000 during prior week)

  • 8:30 a.m. ET: Continuing claims, week ended November 7 (6.4 million expected, 6.786 million during prior week)

  • 8:30 a.m. ET: Philadelphia Fed Business Outlook index, November (23 expected, 32.3 in October)

  • 10 a.m. ET: Leading Index, October (0.7% expected, 0.7% in September)

  • 10 a.m. ET: Existing home sales, October (6.44 million expected, 6.54 million in September)

  • 10 a.m. ET: Kansas City Federal Reserve Manufacturing Activity Index, November (10.5 expected, 13 in October)



6:45 a.m. ET: BJ’s Wholesale Club (BJ) is expected to report adjusted earnings of 65 cents per share on revenue of $3.68 billion

6:55 a.m. ET: Macy’s (M) is expected to report adjusted earnings of 79 cents per share on revenue of $3.86 billion


4 p.m. ET: Intuit (INTU) is expected to report adjusted earnings of 39 cents per share on revenue of $1.21 billion

4 p.m. ET: Ross Stores (ROST) is expected to report adjusted earnings of 61 cents per share on revenue of $3.43 billion

Top News

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Nvidia forecasts fourth-quarter revenue above expectations [Reuters]


U.S. states are bleeding cash as pandemic drags on with no stimulus in sight

Larry Summers' tax advice for Biden: Collect on the $7 trillion owed by 'the richest taxpayers'

Richmond Fed's Barkin: Positive COVID-19 vaccine developments a 'light at the end of the tunnel'

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